The key to keeping stores stocked with the items customers want is good information, and retailers are doing all they can to keep system data clean, accurate and accessible to their suppliers.
To facilitate better data handling, retailers are tackling projects to improve business intelligence, allow data synchronization with partners and apply RFID technology. Early adopters shared their stories last month at the Retail Systems show in Chicago.
Among them was AutoZone CIO Ken Brame, who talked about the analytics platform that helps the US$6 billion auto parts retailer decide which items to stock in each of its 3,700 stores.
Millions of parts are available, but the average AutoZone store can only accommodate 22,000 items. So AutoZone regularly crunches 25TB of data — including sales history and vehicle registration information organized by ZIP code — to determine which parts local customers are likely to need based on the cars they drive, according to Brame.
To give the stores access to current inventory data, Brame bolstered the network that links AutoZone’s stores to its corporate offices and to the company’s vendors. He swapped out satellite links for broadband connectivity so retail staff can quickly view inventory at nearby stores, distribution centres and partners’ salvage yards if a customer needs a part that isn’t available on-site.
“Satellite technology is very good for things like credit card transactions, but with the kinds of data we’re moving back and forth and checking, we needed faster turnaround,” Brame said.
AutoZone isn’t alone in upping bandwidth to its stores. According to research released at the conference, 22 per cent of retailers have started or will start in 2006 a project to outfit stores with high-speed connections.
Network infrastructure projects, in general, are a top priority for retailers, according to the Retail Technology Study conducted by Gartner and RIS News of 300 retailers. One-third of retailers surveyed have a voice/data convergence project in the works or due to begin this year, and 27 per cent are implementing or about to implement wireless LANs.
Also on retailers’ shopping lists are tools to assist merchandising. Almost 40 per cent of respondents plan to start a major project to upgrade their sales forecasting capabilities this year or within the next two years. Other merchandising-related projects due to be launched target assortment planning (37 per cent), price optimization (36 per cent) and item allocation (34 per cent).
The survey also shows that while plans to implement RFID technology aren’t as solid as other IT areas, the wireless tracking technology is on a growing number of retailers’ radars. Gartner found 4 per cent of respondents are in the process of implementing RFID technology and 12 per cent plan to kick off projects this year.
Item-level tagging to begin
Best Buy is one of the dominant retailers helping to drive RFID adoption. CIO Bob Willett talked about an emerging application for RFID in retail settings: item-level tagging. Much of the RFID focus in the world of retail and consumer goods so far has been on tagging cases and pallets of goods. But industry watchers agree, item-level RFID tagging is the next frontier.
Best Buy recently wrapped up a pilot project that involved putting RFID tags on video games destined for one of its Minneapolis stores. One goal was to provide better inventory information so sales associates could spend more time helping customers and less time stocking shelves or digging for merchandise in the back room. It worked, Willett said.
Staff spent less time replenishing shelves and 30 per cent more time on the floor, he reported. At the same time, sales of RFID-tagged merchandise rose 18.7 per cent.
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